Finance Minister Matia Kasaija has emphasized that the government cannot continually resort to borrowing to meet ongoing financial demands, many of which could be deferred, delayed, or discarded. Speaking at a pre-budget dialogue organized by the Civil Society Budget Advocacy Group for the 2024/25 financial year, Kasaija firmly expressed his commitment to avoiding perpetual borrowing, stressing the importance of safeguarding the nation’s financial stability. Despite the regular emergence of new requests during Cabinet meetings, Kasaija underscored the necessity of careful prioritization, acknowledging that not all demands are urgent or indispensable.
In response to concerns raised by civil society organizations about the growing public debt, posing challenges to the economy amid sluggish tax revenues, Kasaija highlighted the persistent nature of supplementary budget requests over the past decade. This continues despite previous government commitments to eliminate such practices due to their contribution to increased borrowing and subsequent spikes in public debt.
As of June 2023, the Auditor General, John Muwanga, reported a substantial increase in public debt, reaching Shs96 trillion. Domestic debt accounted for Shs43.6 trillion (45.4 percent), while external debt stood at Shs52.4 trillion (54.6 percent). The escalating public debt continues to strain domestic revenue, projected to decrease from Shs25.2 trillion in the 2023/24 financial year to Shs21.7 trillion in the 2024/25 financial year.
The allocation of significant funds to debt servicing, a major budgetary component, is expected to rise to Shs3.2 trillion in the 2024/25 financial year from Shs2.6 trillion, diverting resources away from priority sectors of the economy.
Kasaija also addressed criticism from certain government officials who brand him a “miser” for rejecting specific supplementary requests. He emphasized the inevitability of financial constraints, highlighting the importance of prioritizing sectors with significant economic impact, recognizing that financial resources, no matter the amount, will never be sufficient for every sector.
For the 2024/25 financial year, the government has identified key priority sectors, including investments in human capital, infrastructure (roads), peace and security, electricity generation and transmission, and effective disaster management. Kasaija attributed fiscal indiscipline to ministries and government entities that fail to efficiently utilize allocated funds, stressing the necessity for prudent financial management.
Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group, expressed concern about the economic consequences of escalating debt, urging the government to address issues such as imprudent borrowing and spending. He highlighted the potential for savings in areas such as domestic and international travel, entertainment, and welfare.